Credit, collections & insolvency news

Here are some numbersthat should cause every debt collection agency to sit up and take notice: 60% of borrowers are failing to catch up on their repayments; 3.8 million households in the United Kingdom will be in default by 2022, a 9% increase from 2017; 51% of credit cards aren’t being paid off in full.

Now, imagine if there was a solution that could streamline the debt collections processes and improve operational efficiency, one that can quickly raisepromise-to-pay (PTP) rates. Below, are the steps that have proven successful in creating a more intuitive, effective, customer-centric and profitable debt collections process.

Focus on the entire accounts receivable cycle: The traditional approach to collections is to regard unpaid accounts as “bad debt.” But a more holistic approach that incorporates the entire accounts receivable cycle keeps customers more engaged in completing their repayment plans. An effective accounts receivable management system empowers collectors to make better, data-driven decisions that are customised to a customers’ unique needs and circumstances. There are over1,000 County Court Judgment (CCJ) daily in the UK and even though most collectors would prefer to reach an agreement with their customers, there’s a fundamental flaw in the way both parties are interacting. As a result, many accounts that could’ve have otherwise been settled end up in court, a lose-lose scenario for both collector and customers.

Review the entire debt collection process: Once you’ve decided that a new approach is necessary, an audit of your debt collection process is a powerfully effective way to uncover pain points and start developing an action plan for streamlining. For example, repetitive and manual processes may be hindering your agents’ productivity and lengthening average handle times (AHT). Or, the workflows you have in place may be driving up rework rates, causing repayment rates to sag. Root causes for whatever’s ailing your current collections process can only be diagnosed by conducting a full audit.

Develop a more compassionate, collaborative way to collect a debt: Financial troubles can cause depression, anxiety and other mood disorders for consumers. As a result, it’s important to establish a rapport with customers by using multiple means to move collections forward towards an amicable resolution. Specifically, agencies can turn a potentially traumatic experience into something much more pleasant by empowering agents to collaborate with customers in real time, via documentation capture and calculation tools that expedite the process of reaching a customised payment plan. Studies have found that customers pay faster and more reliably with a more efficient and empathetic approach to collections.

Collect payments from anywhere: Recent research indicates that optimising debt collection for an increasingly mobile population is no longer an option, but an industry requirement. In the United Kingdom, 45% of households have no landline, while close to 85% have a mobile phone. Another key insight: PEW research reveals that the indebted population segment relies more heavily on mobile devices than higher-income households.

But today when a debt is owed, the process involves numerous attempts at sending a customer a notice, an outdated and ineffective form of communication. The steps are as follows: a “friendly reminder, formal reminder, harsh reminder, [and a] court warning,” granting each reminder a seven-day time-frame for completion until the next is sent (Mueller).” This cumbersome and highly irritating payment process can be greatly expedited if companies took advantage of the technology that cell phones provide. Companies can reach their client directly through their mobile device. And agencies that optimise their customer experience for this mobile generation will boost customer engagement and collect more quickly.

5. Real-time account updates: A collections process that features automated synchronising ensures that delinquency data is updated in real time. Your agents need not waste time and effort on customers who’ve already paid off their dues. This not only saves time and cost but also prevents a bad customer experience from taking place. Indeed, a major complaint that customers have is that they aren’t able to remove themselves from a collector’s call list even after their debts have been paid.

6. Seamless software integration: The rapid implementation of a more customer-centric debt collection process is based on choosing the right software system. A reputable collections software provider should be able to complete the entire integration process in a matter of days, not weeks. This process will typically include integration with your core processing system; secure transmission of your loan account information; setup of borrower-facing online payment portal and comprehensive agent training.

Maximising Technology, Minimising Confusion

The process for collecting past-due loan accounts is extremely challenging. It can be tedious because most collection agencies use a manual rather than an automated process, leading to low productivity. However, there are technological tools today that are empowering collection agencies to greatly streamline their processes. Real-time and collaborative repayment plans; approval of repayment terms and conditions and instantaneous in-call payments are features that are being increasingly implemented. With such tools in place, any potential confusion between a customer and collector regarding payments can quickly and comprehensively be addressed. The results: higher customer satisfaction and repayment rates.

On Wednesday 30th of January 2019, Lightico, a Credit & Collections Technology Winner,is hosting a seminar on technologies for debt collectors to better manage processes with mobile customers and create a win-win debt collection scenario. Join this free to attend web-event to gain valuable knowledge on some of the challenges other collectors are facing and techniques to address them, even with a customer on their mobile device.